Parent Plus Loan: Know Interest Rate, Eligibility, Repayment Details

Parent Plus Loan

The Parent PLUS Loan is a type of federal student loan. These loans are designed to help parents cover the costs of child’s education. Access to a high-quality education might occasionally become an unattainable objective for many due to rising educational costs. Indeed, investing in education is a decision that has to be carefully considered. When it comes to funding their higher education, many parents and students choose loans.

We will walk you through the Parent Plus Loan in this blog, which is provided specifically to parents who want to contribute to their kids’ higher education. To learn more about it, keep reading.

What is a Parent PLUS Loan?

The Parent PLUS loan is one type of Direct PLUS loan under federal student loans given to the parent or legal guardian of a dependent undergraduate student to assist in paying for the student’s education. Parent Plus loans are given to the parents or guardians of students, not to the students themselves. Due to their more adaptable repayment options, these can be a useful substitute for private student loans. However, these loans can be more expensive than other options, and there are severe repercussions for default, such as the possibility of wage and Social Security garnishment. Here is a summary of this student loan option.

Also Read: Education Loan EMI Calculator

Using these loans, the parent can take out an unlimited amount of credit up to the cost of the child’s attendance each year, less any financial aid received. The parent’s income has no bearing on this. It may sound enticing to have access to an infinite supply of loans, but the parent runs the actual risk of becoming deeply indebted. However, if the grandparent is not the student’s legal guardian, no loans can be given to grandparents on behalf of their grandkids who are enrolled in school. 

Must Read: What are the 7 Steps of the Loan Origination Process

How Do Parent Plus Loans Work?

When given to a parent borrower, a Direct PLUS Loan is frequently referred to as a parent PLUS loan. The interest rate for parent PLUS loans is fixed, and each loan has an origination fee that the borrower must pay. These loans are not subsidised, interest starts to accrue as soon as funds are disbursed and keeps doing so even if the loan is in deferment.

Also Read: Unsubsidized Loans: What You Need To Know

Parent Plus Loan Eligibility

In the table provided below, we have listed the different eligibility criteria required for parents and students in order to avail the parent plus loan:

Eligibility Criteria for ParentsEligibility Criteria for Students
A dependent undergraduate student who is enrolled at least half-time must be your biological or adopted child for you to qualify.They need to be a citizen of the US or a qualified non-citizen.
You must be a citizen of the United States or an eligible non-citizen.There cannot be any outstanding federal direct loan consolidation debt from prior student loan defaults.
To be eligible for financial aid, you typically need to have a minimum credit score.Students who are male and between the ages of 18 and 25 must register with the Selective Service System.
Unless they formally adopt the student, grandparents and guardians are not permitted to borrow money from these sources.

Also Read: Study Abroad Money Transfer

Parent Plus Loan vs Private Loan

Both types of loans have benefits and cons. Let’s look at the comparative analysis of both Parent PLUS loans and private loans:

  • Parent PLUS loans provide additional repayment and forgiveness alternatives, but their interest rates are often higher and the federal government has more collection authority than other lenders. 
  • Private student loans may allow you to reduce your interest costs, but there are fewer forgiveness and repayment options available to you. 
  • The lender’s options for the collection represent another significant distinction. The government might withhold your tax refund or take your earnings or Social Security benefits if you fall behind on your payments. The same garnishment rights are not available to private student loan lenders. Additionally, private loans have a statute of limitations on collection, but federal loans do not.
  • If either the student or the parent borrower passes away, the parent PLUS debts are discharged. Despite certain lenders’ forgiving clauses in the event of death or disability, private debts are nonetheless collectable. 
  • Private student loans typically have cheaper interest rates than their government counterparts, which is their principal advantage. Depending on the borrower’s credit position, a variance of 2% or more may be observed. The lower interest rate can result in significant savings over a 10-year or longer repayment period.
  • Federal loan interest rates are set annually according to the type of loan and cannot be adjusted other than by refinancing or occasionally by enrolling in automatic payments for a slight reduction.


Parents are expected to start making payments as soon as the loan money is delivered. You may, however, ask for the loan instalments to be postponed until the student graduates, drops below half-time enrolment, or quits school.

Parent Plus Loan Interest Rate

Parent PLUS Loans with initial disbursements on or after July 1, 2022, but before to July 1, 2023, currently have an interest rate of 7.54%. For the duration of the loan, this rate is fixed. For loans disbursed on or after October 1, 2022, but before to October 1, 2023, there is also a 4.228% fee.

Parent Plus Loan Application

An application can be made by the parent or legal guardian of a dependent undergraduate student. Parents must first complete the FAFSA, or Free Application for Federal Student Aid, for the school year in which they wish to borrow money.


What is Parent PLUS Loan?

Parents of dependent undergraduate students can apply for unsubsidized Direct PLUS Loans. 

What happens to my Parent Plus Loan if I retire?

Retirement has no bearing on your parent PLUS loan; regular repayment obligations still apply. However, if you’re signed up for income-contingent repayment, your monthly payment is based on your income. Your income may decline after you retire, in which case your loan payment would also decline.

Do Parent Plus loans get cancelled?

Yes, with certain conditions. 

What is Parent PLUS loan interest rate?

The fixed interest rates under Parent PLUS loan may go up to 8.05% on or before July 1, 2024.

This was all about the Parent PLUS loan. Follow Leverage Edu and for more interesting articles and updates. 

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